The real stories from inside the F1 paddock

Mallya is still in charge

Vijay Mallya says he is still in charge of Force India. In which case, Diageo is still claiming $135 million from Mallya’s company Watson Ltd (Mauritius). The drinks company’s loan guarantee was secured with Watson’s shares in Force India (42.5 percent) so, Mallya owes them $135 million or has to hand over the shares. He can delay that a while, by pointing, pulling a funny face and saying “Blimey a flying elephant” and then running out of the room, but one supposes that Diageo is now pretty fed up with him. I imagine that he cannot pull $135 million out of his briefcase without getting into all kinds of trouble with the throngs of other creditors in India, so he is in a bit of a spot, isn’t he?

He doesn’t have the money to buy the other 42.5 percent shareholding that belongs (on paper) to jailed partner Roy Subrata Sahara. His share in the team, acquired for $100 million in 2011, is now worth what someone will pay for it (in other words, next to nothing). Sahara needs $700 million to get out of jail, and does not have many assets left. He is not going to be happy to give his share of the team away, so he might as well stay “inside” and get free board and lodging. The bad news is that the courts may end up seizing his assets and selling them for what they are worth (i.e. next to nothing).

I cannot imagine that Vijay will go to visit Sahara. One needs to be careful what you do in a place where a man can go to jail for two years without being charged… It is safer in Hertfordshire.

And I thought he had settled with Diageo for $75m, just shows how wrong I can be. If he has backed out of that deal I reckon the chance of FI cars lining up on the grid in Australia has reduced as Diageo could well try to stop him .

i should stay out of these complicated topics being as Winnie the Poo said “a bear of very little brain”. I do wonder to what extent
all these dodgy arrangements are a product of the generally lax standards of business in the sub continent. If Vijay had set up all his companies inthe uk we would probably see him as businessman of high repute like bernie for example.

Something may be worth a lot, but 42.5% of it may not be worth much. It depends on who owns the other 57.5% and what they intend to do with it. If you can buy 57.5% of the shares in a company and the structure is such that this gives you control, you may not be much concerned about the other 42.5% of the shares.
In any case, Diageo wouldn’t be ‘paying $135m for 42.5%’. If they are owed $135m, it is being suggested that they may take 42.5% of the shares as a partial repayment, at such valuation as might be agreed. There is no suggestion that such a share transfer would cover Mr Mallya’s entire debt to them.

Like a lot of very wealthy business people Vijay Mallya decided that owning a team in a major sport was a crowning achievement. But like too many of these kings he chose to lose his cloths before relinquishing his crown.

Hi Joe
If the trash that is constantly on my TV is to be believed, it would seem the Mol fortune continues to increase at a rapid rate. Is there any suggestion that they would increase their stake? Do they have any involvement?

I’m not. If you do not recognise what Mallya is then you are an idiot. It has nothing to do with where you, he or anyone else comes from, what colour your skin is, nor whether you bow down and pray to a bicycle or to a cross. Do you even know the meaning of the word racism? If you did, you would not have written this tosh. Go away and learn what it means before I kick you out.

+1 – come on, the guy has repeatedly spoken in glowing terms of Monisha Kaltenborn yet you tar him with such a label because of contrary opinions to someone you like. If anyone should grow up, its not Joe..

I guess that even if Diageo don’t like him the team seems to be run on a very sound basis and achieve results that exceed their budget. Whilst it remains like that the loan value is probably sound. If they call it in and the team stops achieving then the value will also drop.

Is the complicated legal positions of the owners of Force India going to put the racing team at a disadvantage this year and moving forward? And is there yet any idea what the future holds for the team long term? It would appear Vijay Mallya is likely to be going soon, so once he’s gone does this open the doorway for a new name taking over and rebranding the team?

off topic, but it’s bugging the hell out of me…do you know why the Stars and Stripes on the side of the Haas car is back to front? I’ve not seen it mentioned anywhere but here when you posted a mirror image of it to get it right.

Saw an interesting video re: Mallya and how he deals with parking his Ferrari in New York. Anyone else seen it?

He walks into a bank, takes a 5k loan out and leaves the car as guarantee. Paperwork confirms the car is his, so bank happily issues loan and stores car in basement.
.
He comes back 2 weeks later, pays interest ($15.71) and loan off. Takes car back. Cheap and secure way to park in NYC.

Exciting sighting alert! I saw Vijay with his entourage in the ‘Plume of Feathers’ pub in Tewin over the Christmas break – he had enough for a round as he was first up to the bar. I understand he now owns/rents Anthony Hamilton’s place round the corner. Totally unrelated but on the walk home we spotted a Toshiba laptop in the hedgerow.

What all this implies is that there will not be any easy end to the whole mess.

But one does wonder what prompted your rather harsh dismissal of the Indian judiciary and the system. To the best of my knowledge, Subrata Roy thought he could thumb his nose at the courts and they made an example of him. He has not been released because he has not been able to pay the bail set. He’s been charged with various counts of fraud and insider trading by the capital market regulator. Seems pretty clear from a simple search. I freely admit that’s the extent of research i’ve done before posting here, although i’ve always watched this struggle with interested as it concerns F1 and Force India, who have won me over out of the sheer pluck they display every season.

The person who accused you of being racist clearly didn’t stop to think before he typed, based on what he inferred from your post. But, it would really help if you took a moment to clarify, although you may feel it well within your rights not to. I’ve been a keen follower of your blog, and love reading it.And no doubt about it, society, India even more so, has become very keen to take offense to anything that it perceives to be against its beliefs.Our primetime television debates are a sad testament to that.But I must admit that I was a bit surprised when I read the last few lines.

I’d really like to hear what you’ve got to say, so that it’s put to bed and we can get back to more serious matters.

I have been following this mess for the last three years. Long before others started on it. I got attacked then for being anti-Mallya. I’m not I’m anti-sleaze in F1. If he was not in F1, I wouldn’t give a toss what he does, nor the whys and wherefores of Sahara being in jail. I am not campaigning to change India, that has to be done by the people themselves. I am only interested in F1 in this respect.

What amazes me is that Force India has been such a solid mid-field team over the last few years. I’m not sure who deserves the credit (Bob Fernley?), but year after year they do well in spite of the Mallya drama. Props to whoever gets that job done.

Credit to the team indeed for keeping it going on as well as it has. Is there any chance of a management buyout vaguely similar to what Brawn did? A bit of Diageo money to keep the team running for a year whilst the shareholdings are all sorted out and a long term buyer is found, giving the timing to brand it Aston Martin or whoever in 2017.

The people running the team (i.e.: Bob Fernley, etc.) could have seen the writing on the wall that eventually Mallya’s empire might start to crumble so they may sure that all was in order as far as the team was concerned (as much as they could) just in case what is happening now happened.

The one thing you can say in his favour wrt to Force India is that he seems to have managed this ‘asset’ with a very light touch. Although to be fair he probably hadn’t got the time as it must have been a near full time job spending money on his mind boggling collection of toys and probably now having to sell them all ! Along with the obvious schadenfreude there is also a slight feeling of sympathy as he met his match with the airline and nobody can go around ordering A380’s unless they are on a very secure financial footing.